ECB Chair Lagarde speech (LIVE)

ECB lowered interest rates by 25 bps, in line with markets expectations. Here are the ECB chair, Christine Lagarde remarks on eurozone economic growth, inflation and tariffs.

• Spending on new European defense programs can stimulate economic growth and industrial sector

• The disinflation process is progressing in line with previous expectations. Inflation forecasts for the coming years have been slightly revised upward due to energy price dynamics (2025: 2.3%, 2026: 1.9%, 2027: 2%). Monetary policy is becoming less restrictive as planned.

• Real wage growth signals a recovery in consumer demand within the Eurozone.

• The EU economy recorded modest growth in Q4 2024, with a similar trend continuing in 2025. Industrial activity remains a drag on the EU economy despite improvements in PMI indicators, while the services sector remains on solid ground.

• The main challenge remains the low level of corporate investment, driven by high geopolitical uncertainty.

• Demand for labor has visibly slowed in 2025, further reducing inflationary risks stemming from wage pressures in the labor market.

• More spending would be a boost to European economy. Uncertainty is huge. The ECB needs time to understand the impact from tariffs. Must understand defense plans before passing judgment.

• If data will signal a pause, ECB will do it. The ECB is not pre-commiting and will decide based on data.

• Loan growth is picking up. Defense and infrastructure spending could raise not only growth but also inflation. Geopolitical tensions create two-sided inflation risk and are a major source of uncertainty.

• As for now, risks for growth are titled to downside. Recent wage deals point to continued moderation to wage pressures. Most inflation expectations gauges support return to 2%.

• Domestic inflation is still high, but uncertainty has risen, to damp the economy. 

• Exports are to benefit from global demand, barring tariffs. Employment growth in Eurozone was subdued in January and February. Consumers confidence is fragile.

• Services are resilient and support the consumer spending trend, but labor demand has moderated.